The Wall Street Journal-20080202-Earnings Digest- LCD Sales Brighten Sharp-s Profit Picture
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Earnings Digest: LCD Sales Brighten Sharp's Profit Picture
Full Text (391 words)TOKYO -- Japanese consumer-electronics maker Sharp Corp. reported a 3.8% increase in quarterly net profit as strong demand for its liquid- crystal-display panels was tempered by price competition that weighed on its flat-panel-television business.
Despite concerns about an economic slowdown, Sharp, known for its "Aquos" brand, sold nearly 2.6 million TVs in the quarter world-wide, a 42% increase from a year earlier. Still, profits on TVs declined as prices fell faster than expected in the industry.
The company has been able to offset that trend with strong sales of its LCD panels, used in TVs, computer monitors, cellphones and other consumer-electronics devices. The company is one of the world's top manufacturers of LCD panels.
Sharp said its net profit for its fiscal third quarter, ended Dec. 31, rose to 29.6 billion yen ($278.4 million) from 28.5 billion yen a year earlier. Sales increased about 12% to 921.2 billion yen from 820.1 billion yen.
The consumer-electronics unit, which sells products such as TVs and DVD players, posted a 19% decline in operating profit to 11.2 billion yen from 13.9 billion yen. Revenue rose 12% to 449 billion yen.
Its LCD-panel unit, which contributed nearly half of the company's overall operating profit, reported a 28% rise in operating profit to 24.4 billion yen, as revenue increased 27% to 306.7 billion yen.
Although it stressed that its TVs continue to sell strongly, Sharp conceded that bigger models weren't selling as quickly as it had hoped.
Sharp said it plans to offset any slowdown in sales in the U.S. and Europe by boosting its sales efforts in fast-growing emerging markets such as China and India. It is making a particularly aggressive push to sell LCD TVs in China ahead of the Olympics in Beijing this summer.
The company's solar-systems unit, which it sees as a future growth driver, saw revenue decline 9% to 32 billion yen. The unit was unable to procure sufficient polycrystalline silicon, a key ingredient, to make enough panels to meet demand. The solar-cell industry has been growing rapidly in the past few years, which has led to a shortage of the silicon, also used in semiconductors. That has driven up silicon prices, boosting manufacturing costs.
Sharp, which bases its financial results on Japanese accounting standards, stood by its full-year forecast for a 3.2% rise in net profit to 105 billion yen.
